In a robust defense of a controversial clause in the Income Tax Bill, 2025, Finance Minister Nirmala Sitharaman has endorsed granting tax officials the authority to tap into encrypted messages and emails to target tax evaders and financial wrongdoers. Addressing the issue in New Delhi this week, she cited a recent breakthrough where decrypted WhatsApp chats facilitated the recovery of over Rs 90 crore in cryptocurrency assets linked to an illegal syndicate.
Sitharaman emphasized the rising exploitation of encrypted platforms like WhatsApp for illicit activities, including money laundering and tax evasion. “The Income Tax Act of 1961 refers only to physical records like ledgers and books of account, leaving digital records unaddressed. This loophole allows individuals to challenge the need for digital scrutiny when physical records are provided. The new bill bridges this divide,” she stated during a parliamentary session.
The Finance Minister disclosed that tax authorities have already unearthed Rs 250 crore in hidden funds by analyzing encrypted communications and mobile devices. “WhatsApp chats exposed syndicates generating fake bills worth Rs 200 crore and cases where capital gains from land deals were misrepresented with forged documents, slashing reported gains from Rs 150 crore to Rs 2 crore. Professional networks on WhatsApp have also been implicated,” she elaborated.
She further revealed that tools like Google Maps have aided in pinpointing cash-stuffed hideouts and tracking unreported deals, while Instagram profiles have helped link luxury vehicles to benami properties.
Sitharaman remained tight-lipped on the methods used to access encrypted messages, leaving unanswered whether WhatsApp’s encryption was bypassed or if data was retrieved directly from seized devices. The bill’s expansive reach has raised concerns, particularly regarding its alignment with the stringent encryption safeguards upheld by messaging apps.
WhatsApp, owned by Meta and boasting roughly three billion users worldwide, has yet to respond to the proposed law. The platform staunchly defends its end-to-end encryption, stating, “Your personal messages and calls are secured between you and your chosen recipient. No third party, including WhatsApp, can access or share them. With end-to-end encryption, messages are locked, and only you and the recipient hold the key to unlock them.”
Tensions between WhatsApp and the Indian government over encryption are not new. In 2021, WhatsApp took legal action against the government, contesting the Ministry of Electronics and Information Technology’s (MeitY) rules mandating traceability of message originators under the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
In April 2024, WhatsApp warned the Delhi High Court that it might withdraw services from India if compelled to weaken its encryption framework.
